New drama Power has done well for Starz. Source: Starz.

Shares of Starz (NASDAQ:STRZA) were down 9.5% near the end of the trading day Wednesday as investors jeered quarterly results that fell far short of estimates. Here's a closer look at the Q2 totals versus Wall Street's projections:

STRZARevenueYOY GrowthEPSYOY Growth
Consensus estimate  $451.18 million  10%  $0.67  8.1%
Q2 actual  $417.7 million 1.9%  $0.59  (4.8%)
DIFFERENCE  ($33.48 million)  (8.1%)  $0.08  (12.9%)

Sources: S&P Capital IQ and Starz press release.

Commenting on the results, CEO Chris Albrecht said in a press release:

We were pleased with the performance of our businesses in the quarter with revenue up 2% and Adjusted OIBDA and operating income increases of 5%. In addition, we had a very successful quarter in terms of original programming and remain on track this year to achieve our goal of 75-80 episodes of new STARZ Original series. Both the second season of Power and the first season of Outlander delivered strong viewership, as well as industry and fan accolades. Looking ahead, the balance of the 2015 originals slate is strong with Blunt Talk, Survivor's Remorse, Da Vinci's Demons, Ash vs. Evil Dead, and Flesh and Bone. Our original programming pipeline was also fortified with a great, new addition thanks to our green light of Neil Gaiman's American Gods. We are confident that robust original programming in combination with our quality movie offerings will further strengthen our distribution and subscriber relationships.

What went right? Not much financially, though originals are gaining traction. Power put up record viewership for a Starz original, including the most successful season premiere in network history. A third season is in the works now. Trouble is, the viewership gains from PowerOutlander, and other originals aren't yet adding up to significant subscriptions growth.

Starz added 1.5 million members over last year's Q2 -- a 6.8% gain -- while ENCORE lost 600,000 members. New projects need to bring in Starz members at a much faster clip if the business is to grow at the rate investors expect. But if they do, cult series such as a forthcoming adaptation of Neil Gaiman's American Gods or Comic-Con favorite Ash vs. Evil Dead could be catalytic. 

What went wrong? Plenty. Cash flow from operations fell from a $60 million gain in the first six months of 2014 to a $26 million loss through the opening half of 2015. A 29.4% increase in investment in original series helped create the gap, leading Starz to add $135.3 million in debt over the past year.

What's next? Starz didn't include a third-quarter outlook in its press release. Nevertheless, analysts tracked by S&P Capital IQ have the company generating $434.62 million in revenue and $0.64 a share in profit after accounting for stock-based compensation and other noncash items. That compares with $408.20 million and $0.51 a share in last year's Q3.

Longer term, analysts have Starz growing earnings by an average of 12.73% annually over the next three to five years. 

In the meantime, investors should pay close attention to the balance sheet and cash flow payments related to original programming. Starz isn't yet producing enough cash to 100% fund its investment in originals. Investors will reap the benefits when that changes.